Individual investors commonly own portfolios of financial assets such as stocks, mutual funds, bonds, certificates of deposit, foreign currencies, options, REITS, cash, or any other tradable assets. To help manage their asset portfolios, investors often employ the services of an investment firm. Often, an individual financial advisor serves to provide advice and facilitate communication between the investor and the investment firm.
Investment firms typically hold the investors' assets in investment accounts. In situations where an investor desires to change investment firms or otherwise change the entity who holds the investor's assets, it may be necessary to transfer the assets in the investment account. For example, in situations where the new investment firm does not share a common clearing broker-dealer with the original investment firm, it may be desirable and/or necessary to transfer the financial assets of the investor's portfolio from the account of the original investment firm to an account of the new investment firm.
One method for transferring assets involves first converting the financial assets at the original investment firm to an equivalent amount of cash, depositing the cash in the new investment firm, and converting the cash to back to an equivalent amount of the assets to be held by the new investment firm. Unfortunately, however, this method requires multiple transactions to be completed, each incurring transaction expenses, exposing the investor to market risk, and often triggering tax consequences.
To avoid these pitfalls, various methods have been developed to affect who holds the financial assets without requiring their conversion to an intermediate transferable medium, such as cash. For example, where securities are held as book entry, a transfer may be accomplished by modifying the holders' books and records. To further streamline the transfer process, investment firms have developed and standardized procedures to accommodate transfers of most common types of financial assets. For example, major investment firms have established the Automated Client Account Transfer System, i.e., ACATS, which is an electronic network system configured to facilitate transfers of financial assets.
Although investment account transfers are typically accomplished according to standardized procedures, the standard investment account transfer process can be complex and time consuming. Both the procedures that are used and the time that is required to complete a transfer depend upon whether the transfer may be accomplished through an established electronic network system such as ACATS. Even where an investment account transfer may be accomplished using ACATS, however, delays may be experienced due to manual process steps that may be entailed. Moreover, in cases where an investment account transfer may not be accomplished using any established electronic network system, such as where the assets to be transferred may include checks, wire transfers, certificates of deposit, or cash, the established time standard may be much longer. Further, in the case of direct rollovers, some transfers may require a longer time standard. Accordingly, many would want the current time standards to be shortened.
Some of the causes of these unreasonably long time standards are the necessity for manual evaluation, processing, and monitoring involved in many of the steps in the transfer processes. For example, despite a high degree of automation, the ACATS transfer process still requires employees to manually evaluate the assets being transferred, to manually submit investment account transfer requests, and to manually monitor the status of asset transfers. These manual process steps are time consuming and may result in errors, causing process steps to be repeated. Similarly, where an investment account transfer may not be accomplished using an established electronic network system, the processes may be even more manually intensive and may be dependent upon cooperation between the investment firm from which the assets are to be transferred, i.e., the delivering firm, and the firm to which the assets are to be transferred, i.e., the receiving firm. As a result, the process may depend upon the timeliness, accuracy, and cooperation of competing entities and often requires excessive monitoring and repeated process steps. Typically, where the transfer process is unable to rely upon an established electronic network system, manual review of assets and manual decisioning based on industry and specific business rules of individual Broker-Dealers must be performed. Historically, another significant source of dissatisfaction with investment account transfers stems from the common failure to notify appropriate parties when key process steps have been completed or when necessary information is needed.
Accordingly, it would be advantageous to have a system and method for facilitating investment account transfers where the time standard for reliably accomplishing a transfer could be reliably decreased. It would also be advantageous if the system and method for facilitating investment account transfers were more consistent, reliable and automated while decreasing requirements for manual processing. Further, it would be advantageous to have a financial account transfer system that could be configured to facilitate both monitoring and execution of the transfer process with appropriate decision-making and messaging capabilities.